U.S. business groups sought Tuesday to increase pressure on the Trump Administration to retain the existing structure of the North American Free Trade Agreement, urging U.S. officials to avoid advancing a new version of the pact that includes Mexico but not Canada.
“It would be unacceptable to sideline Canada, our largest export market in the world,” wrote the heads of the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers in a letter to U.S. Trade Representative Robert Lighthizer.
The business groups also called for negotiators to build in strong enforcement provisions to hold all three countries to account; avoid sunset clauses that could lead to the termination of the agreement; and exclude language allowing for new tariffs on the auto industry or other sectors.
The letter, viewed by The Wall Street Journal, comes as U.S. and Mexican officials are seeking to put pressure on Canada to make concessions soon and join in a three-way agreement—or be left out of a new two-nation pact.
The Trump administration notified Congress last month that it had struck a deal with Mexico and would formally sign a new version of Nafta as early as late November. Canada would be part of the agreement “if it is willing, in a timely manner,” President Trump told congressional leaders.
Any overhaul of Nafta would require a majority vote in support of the pact in the House and Senate to take effect. Traditionally Republican lawmakers have taken into account the views of business groups on trade issues, while many Democrats have often taken a cue from labor groups.
In recent weeks, U.S. labor groups have aligned with business groups in expressing a strong preference for including Canada.
“On this one, we happen to agree,” said Celeste Drake, trade expert at the AFL-CIO, the big U.S. union federation with affiliates in Canada. “We want the rules rewritten, but that doesn’t mean to exclude anyone.”
The upshot is that Canadian officials see limitations in the Trump administration’s latest pressure tactic of proceeding with Mexico alone, since any deal without Canada would face strong domestic opposition in the U.S.
Canadian Foreign Minister Chrystia Freeland would leave for Washington, D.C., late Tuesday for Nafta meetings this week, a spokesman said. It was unclear how long she would be there, he added. On Monday, Ms. Freeland said she had been in touch with Mr. Lighthizer, although some conversations “are better to have face to face.”
Ms. Freeland and other officials have repeatedly skirted questions about meeting an end-of-September deadline, adding that their focus is about reaching a deal that is acceptable to Canadians.
Canadian Prime Minister Justin Trudeau said Monday night that the U.S. and Canada “are not there yet” on an agreement. “We might be days or weeks away now. It might not be,” Mr. Trudeau said in a broadcast interview with Maclean’s magazine.
U.S. tensions with Canada were magnified in June, when Mr. Trump attacked Mr. Trudeau over Twitter after the Group of Seven summit in Quebec. The two leaders may have the chance to address trade concerns including Nafta next week at the United Nations General Assembly. So far a meeting hasn’t been scheduled, officials said.
In any revised version of Nafta, Mr. Trudeau has insisted on keeping a dispute-resolution system contained in Chapter 19 of the original Nafta. The system allows Canada or other countries in the pact to appeal to arbitration boards to overturn tariffs imposed on allegedly dumped or subsidized goods. Mr. Lighthizer has proposed abolishing the dispute system.
For his part, Mr. Trump has criticized Canada for a system that protects its dairy farmers. U.S. negotiators are seeking to boost American farmers’ access to the Canadian market to at least the level agreed upon in 2015 for the Trans-Pacific Partnership, the sprawling trade agreement that Mr. Trump abandoned before it got a vote in Congress.
Under a 2015 U.S. law, administration officials are supposed to publish the text of a trade agreement at least 60 days before it is signed with trading partners. Mexican officials are eager to sign a new version of Nafta before the country’s president-elect, Andrés Manuel López Obrador, takes office in December. They worry that the new leftist president could seek changes before signing the pact under his watch.
U.S. officials hope they can iron out their differences with Canada in coming days so that a text of the new agreement can be released by the end of the month. Negotiators have missed several prior deadlines.